GM says the new national contract, which is subject to union ratification and court approval, includes a historic agreement to establish an independent trust to cover the costs of retiree health care.

Union officials praised the contract, which also includes job security guarantees.

"We feel very good about this agreement," UAW president Ron Gettelfinger said. "I think this strike helped our side."

Mr Gettelfinger predicts GM's employment level should remain constant over the four-year term of the contract.

Further details are being withheld pending union ratification, the union said.

Pickets were withdrawn from GM worksites about an hour after the agreement was reached at and union officials were notifying members that they should return to work on Wednesday afternoon.

The automaker said the deal "paves the way for GM to significantly improve its manufacturing competitiveness, providing the basis for maintaining and strengthening its core manufacturing base in the United States."

"This agreement helps us close the fundamental competitive gaps that exist in our business," GM chairman and CEO Rick Wagoner said in a statement.

"The projected competitive improvements in this agreement will allow us to maintain a strong manufacturing presence in the United States along with significant future investments."